ECONOMY

Bank hints of more rate rises; following the surprise decision by the Bank of England’s Monetary Policy Committee to raise interest rates by 0.25 per cent to 4.75 per cent at its August meeting the Governor has hinted that there is a “50-50 chance” of consumer price inflation rising above 3 per cent. The Bank’s quarterly Inflation Report says that the strength of the inflation forecast is driven by buoyant demand and growth, and the fact that there is little spare capacity left to dampen price pressures. In the short term, it shows inflation rising sharply through the rest of 2006 thanks to higher fuel bills and steep increases in student tuition fees. It then shows inflation falling back towards but not to the 2 per cent target. Some economists predict that the Bank (pictured right) is being too optimistic about economic growth and that further rises will not be needed. However, a Reuter’s poll of 32 analysts showed a slim majority forecasting another rise in 2007 with the remainder predicting
another rise in November. Further information - click here Times 10.08.06

 

Student fees are new inflationary concern; whilst petrol prices, gas and electricity bills have borne most of the blame for rising inflation since the start of the year, the Bank of England has now expressed concern about university tuition fees. Starting in October almost all universities will be charging up to £3,000 a year which is seen as a rise of 155 per cent in the price of studying for most students. The Bank has admitted that it had overlooked this jump and the Monetary Policy Committee has determined that it will increase inflation by 0.25 per cent in October. The Office for National Statistics has not yet decided how to treat tuition fees in the national accounts or the inflation figures. Some argue that they should not be included at all as they will eventually become ordinary bits of public expenditure. However in the short term, as the fees are being phased in over three years it is likely that they will raise the rate of inflation by 0.3 per cent between October 2006 and September 2009.
Financial Times 10.08.06

Brown ‘must cut spending to avoid breaking his rule’; the National Institute of Economic and Social Research calls on the Chancellor to use next year’s spending review to put the brakes on public expenditure to avoid breaking the “golden rule” that governs public finances. This states he must not borrow to fund day-to-day spending when averaged out over the economic cycle. It also says that thanks to the oil price, rising interest rates and the appreciation of the pond the Treasury will miss its bullish forecasts for economic growth. Further information - click here Independent 28.07.06

ENTERPRISE

Britain lags in start-up funding; a report by the Judge Business School Centre for Business Research at Cambridge University calls on the UK to adopt US systems of public procurement contracts to nurture innovation. The study’s author, David Connell, says that hi-tech start-ups in the US receive up to ten times as much government funding as their struggling UK counterparts. He compares Washington’s Small Business Innovation Research programme (SBIR) with the work of the Department of Trade and Industry (DTI) in the same field. The SBIR, which he describes as the world’s largest seed capital fund, provides generous 100 per cent start-up grants worth over $2bn a year whereas the most the DTI can offer is 35 per cent of start-up funding. US departments are also obliged to channel an average of a quarter of their spending to small and medium-sized enterprises under the so-called ‘set aside’ rules. Further information - click here Observer 30.07.06

Bankruptcy law changes may hinder enterprise; writing the Business Commentary in the Times, Robert Cole looks at the bad debt provisions being reported by the major banks. He says that the long-term significance of the changes to the bankruptcy laws are now becoming apparent and that instead of encouraging enterprise they may have had the reverse effect. He says that there are two main implications, of which the first is that loan finance is likely to become scarcer or more expensive. That may not be a bad thing in that too many people and companies fail to give enough thought to the wisdom of getting into hock. The use of personal guarantees to support loans to start a business makes them indistinguishable from common-or-garden debts incurred for consumer electronics and their like. The intention behind the bankruptcy law changes was that if was made easier to wipe the financial slate clean, more people would be encouraged to take risks. However, if the changes give the banks a financial liability they will be less keen to lend. The second main implication is changing attitudes towards debt. Will younger consumers now be willing to walk away from debts they find awkward or inconvenient to honour? Times 01.08.06

Brussels falters in red tape drive; it has emerged that despite a high-profile commitment to cut red tape the European Union is falling way behind its targets. In October 2005 José Manual Barroso, Commission President (pictured right), and Günter Verheugen, Industry Commissioner, announced plans to simplify 222 laws and more than 1,400 other provisions linked to the laws by 2008. But of the 54 simplification measures earmarked for this year, only five have been completed, a failure that has left Mr Barroso deeply frustrated. Privately officials say that at the most 35 of the measures will be completed before the end of the year. Angela Merkel, the German Chancellor, has promised to make better regulation a priority of Germany’s EU presidency next year and has backed a plan by Mr Verheugen to scrap up to 25 per cent of all EU legislation. Financial Times 01.08.06

Designers herald Nissan tax ruling; the design industry has greeted the decision by Revenue  and Customs to allow the UK arm of Nissan to claim tax credits on part of its design investments as a breakthrough that could support businesses developing new products. The decision mirrors one of the recommendations of last year’s Treasury-commissioned Cox Report into creativity in business that called for greater use of tax incentives to encourage R&D. British companies have long been able to claim R&D tax credits but the new decision clarifies that the design of prototypes during testing are also covered, as long as they can be shown to advance science or technology. The Design Council has already commissioned Deloitte, Nissan’s advisers, to evaluate the scope for smaller companies. Financial Times 11.08.06

Most UK universities set to sign technology transfer deals; according to Andrew Newland, Chief Executive of Angle (pictured right), most of Britain’s top research universities will have signed long-term deals giving companies exclusive access to their discoveries and inventions within the next two years. Angle, which is a company that specialises in turning high-technology ideas into profitable companies, has just signed its first UK university deal when it bought the rights to anything produced by academics working at the University of Reading for the next 20 years. Since the first such deal was agreed in 2000 between an investment bank and a university chemistry department, 10 institutions have signed similar deals. Newland believes that there are another 30 high-calibre universities to be signed up. The strategy of selling rights to any future intellectual property created by academics in return for upfront funding has been seen as the answer to the problems faced by UK universities; that they lack access to early-stage venture capital and the expertise to turn ideas into viable companies. However, there was some criticism of UK universities that focus on the potential short-term royalties that spin-off companies can generate when the Prime Minister attended a high-powered lunch of leading companies in Silicon Valley during his visit to California last month. The lunch, which was hosted by John Chambers, President and Chief Executive of Cisco, was attended by nine other leading US companies including Steve Jobs of Apple, Vint Cerf of Google and Mark Hurd of Hewlett Packard. They stressed the benefits that long-term relationships between business and universities can bring. Financial Times 01.08.06

Private investment in social enterprise; the Office of the Third Sector, a body set up within the Cabinet Office to promote social enterprise, has announced a scheme to increase private investment in the sector. Three organisations will receive up to £100,000 each to pilot proposals that promote innovative approaches to social investment and increase the understanding of the barriers that inhibit private investment. In a recent RBS-NatWest survey 37 per cent of community interest companies said that access to finance was their biggest problem. Further information - click here Regeneration 11.08.06

COMMUNITY

‘Migration enhances the greatest of British values’; writing a column in the  Times2 Richard Morrison says, “something exciting is happening in Hendon”. He says that walking around the streets of Hendon most of the conversations are in Polish or Chinese and the sociological changes are evident in the local supermarkets and schools. Local traders and craftsmen come from all over the world. It isn’t an entirely new thing. Thousands of Jewish refugees settled in Hendon in the 1930s and they were followed by immigrants from the Caribbean and the Indian sub-continent. Hendon was enriched by all those influxes and more. But these migrations took place decades ago. Virtually nobody expected that two recent and unrelated waves of newcomers would collide on the same streets. The first was created by the enlargement of the EU. The government predicted that as visa restrictions were lifted, 13,000 migrants would come from Eastern Europe each year. In fact a staggering 345,000 have arrived in the first two years, of whom, the majority are Poles, and most of them live in my road. They don’t get into trouble and they don’t cause trouble. What’s not to like? The second is the Chinese who are sending 53,000 students to UK universities. Morrison says that he has rarely met a bunch of youngsters so determined to make the most of their opportunities. The reality is that no other city in the world (not even New York) now contains so many diverse races and tongues as London, which now makes it different to the rest of the country who fear that they are being overrun by gangs of crooks, or of having “British values” undermined, or our taxes being gobbled up by “benefit scroungers”. Morrison says he can understand the fears but can’t share them. If you talk to the newcomers you get the impression that the vast majority will put more into our society than they will take out. As to undermining our values Morrison says the reverse is true. The presence of so many nationalities in London, at a time when the world seems like a powder-keg awaiting a catastrophic spark, encourages those that live here to endorse what is surely the greatest of all British qualities. Tolerance. Mutual Respect. The only creed with the slightest chance of leading us towards peace on earth. The creed of “live and let live”. Times 01.08.06

Polly Toynbee points to the downside; Polly Toynbee (pictured right) examines the immigration  dilemma facing the main political parties. She points to John Reid’s speech to Demos where he said that he wanted to limit immigration to balance “enhancing the economy of the country commensurate with our social stability”. She says that indeed is the dilemma - more GDP v social justice for the low paid. The issue is made more urgent by the pending EU decision about admitting Bulgaria and Romania and whether the UK will be one of the few to let their citizens work here immediately. The unexpectedly high influx of eastern Europeans, mainly Poles (John Denham, a former Home Office Minister estimates that the true number is closer to 1 million than the official figure of 400,000) has brought benefits. They bring desperately needed skills, from dentistry to plumbing, compensating for Britain’s historic failure in vocational training. But their arrival also takes the urgency out of upskilling our own under-trained workforce. The IPPR have calculated that migrants make up only 8.7 per cent of the UK’s population but pay 10.2 per cent of its income tax. This ideally flexible labour force does indeed grow GDP but it is also often grossly exploited while depressing the wages of all. Even if GDP grows, migration can make the rich richer and the poor poorer. London, where migration is greatest, also has the highest unemployment, especially among British-born ethnic minorities. Guardian 11.08.06

Charities at risk as public donations fall behind state funding; a report from the  Centre for Policy Studies warns that the independence of the voluntary sector is at risk from increased state funding. It says that state funding now accounts for 38 per cent of charities’ total annual income of £26.3bn, compared to 27 per cent from donations. In the three years up to 2004 donations grew by 7 per cent whilst state funding rose by 38 per cent. The report, which was written by Richard Smith, the founder of a small charity, and Philip Whittington, a member of the Tory party’s social justice task force, also criticises the increasingly corporate style of the larger charities, which is undermining the public’s trust and confidence in the sector. It singles out the top salaries and the increased expenditure on fundraising and publicity. The report claims that large charities pay nearly £2 to raise an extra £1, although the charities respond that the money raised comes in for a number of years. The report, Charity: the spectre for overregulation and state dependency, claims that the increasingly corporate style of large charities is undermining the public’s trust and confidence in the sector. For further information click here Guardian 10.08.06

16 to 24 year olds turning their backs on TV and newspapers; the annual report of Ofcom, the communications regulator, says research shows that more than half of the UK’s 16 to 24 year olds are using social networking sites such as MySpace at least once a week as they turn away from television, radio and newspapers in favour of online communities. The findings underscore a rapid divergence between young consumers’ media habits and those of the older generations, which could have worrying implications for traditional media companies. The under 24-year-olds are watching about 18 hours of television a week - seven less than the average and one-and-a-half fewer than in 2004. They are also spending 59 per cent of their viewing watching the five main terrestrial channels - a drop of 11 per cent from four years ago. Another trend is that 38 per cent are watching television on their personal computers. Some media companies are already positioning themselves for the shift of audiences. Rupert Murdoch’s News Corporation has bought MySpace, ITV has bought Friends Reunited and Viacom are thought to be getting ready to bid for Bebo. For further information - click here Financial Times 11.08.06

BUSINESS AFFAIRS

Haskins attacks ‘lip service’ to CSR; writing in the FT, Lord Haskins (pictured right), former  Chairman of Northern Foods and of the Better Regulation Task Force, says that even though most “reputable” companies claim to be socially responsible the concept has been in decline since its heyday in Victorian England. He lists some of the reasons for the decline including the growing role of the state in tackling economic deprivation, the decline in family businesses, the abandonment of corporate bases in the provinces and the emergence of the City institutions as shareholders. Whilst he welcomes some of the reasons for the decline he deplores the loss of the sense of community, which he says has been replaced by the self-centredness of consumerism. He acknowledges that that there is now a lot of activity in corporate social responsibility but that despite the hype and the well-meaning efforts of lowly corporate responsibility advisers, company boards are only paying lip service to the concept. Business in the Community, which was created to encourage companies to invest in the community, has been so badly let down by its sponsors that, today, absurdly, it seeks financial help from the state. Nevertheless, committed practioners from the Quaker manufacturers of the 19th century to the Marks and Spencer’s of today can demonstrate that serious community engagement is not only good for those who benefit directly- but also, somewhat surprisingly, for enhancing shareholder value. Financial Times 02.08.06

Supermarkets clash over organic boxes; both Tesco and J. Sainsbury have  announced plans to compete in launching rival organic vegetable box schemes. Both groups are seeking to take a bigger share of the £1.6bn organic vegetable market which is growing at 30 per cent a year as well as being seen as the greenest supermarket chain. Sainsburys will trial its scheme to around 500,000 customers in the East Midlands and East Anglia from the end of August, while Tesco will test its vegetable boxes in South London from early September. To counter the soaring popularity of farmers’ markets the supermarket chains have pledged to source more local and regional products, although Sainsbury’s said that they would resort to nationwide sourcing if necessary. Friends of the Earth said: “It will be a threat to the smaller, very genuinely local businesses that are running box schemes because Sainsbury’s and Tesco will be able to undercut them, which could put local farmers out of business”. Ocado, the online grocer that supplies Waitrose products, said that it had experimented with boxes but had found that that they had a greater demand for other types of organic product. On the Fairtrade front, Marks & Spencer have started stocking Fairtrade Jeans, which, at £35 for women’s jeans and £29.50 for men, will sell for four times the price of their cheapest jeans. The cotton for the jeans comes from Mali. The premiums being paid for the cotton in the M&S jeans is to be invested in two new school buildings and paying half the salaries of three new teachers. Marks and Spencer have also been awarded the Business in the Community award for social responsibility for the second time in three years. Guardian 31.07.06

And over plastic bags; Tesco have unveiled plans to offer shoppers financial incentives  to use fewer plastic bags. Shoppers will be encouraged to re-use bags by offering one point on the Clubcard loyalty scheme for every plastic bag they do not use. From September all Tesco’s bags will also be degradable and a new thicker and bigger bag introduced so that shoppers will need fewer of them and will be more likely to re-use them. Other supermarkets as well as Friends of the Earth attacked the new bags because they are still plastic, made from oil and will have to go to landfill. Friends of the Earth said that they were a “greenwash option…to mislead customers and make them think Tesco is being green”. The number of plastic bags handed out to British shoppers each year is over 17bn and becoming a major issue. Only one in every 200 is recycled and an estimated 100,000 tonnes of plastic bags (the same weight as 70,000 cars) are thrown away each year. In Ireland the government has imposed a 10p tax on plastic bags with the result that usage dropped from 1.2bn to 85m a year although usage is starting to creep up again. A MORI opinion poll in the UK showed 63 per cent in favour of an Irish-type levy. For further information click here Guardian 05.08.06

REGIONS AND REGENERATION

UK regional imbalance may become self-perpetuating; record levels of public spending are making many regions of Britain into “colonies” of London and the South East according to a new report from the Reform think tank. The report, Whitehall’s Last Colonies: Breaking the Cycle of Collectivisation in the Regions, has been compiled by a team led by Professor Nick Bosanquet of Imperial College. It claims that not only are large areas of the country are becoming financially dependent on the taxpayers of London and the South East but that high government spending is stifling enterprise and driving young people away. Between 2001 and 2004 there was a big migration south by young people with the effect that the least successful regions become “grey” with more than 44 per cent of the population of Wales and the North East over the age of 44 compared to 32 per cent in London. Reform shows how the country is becoming “Londoncentric”- dependent on London and its hinterland. The capital, together with the South East and East Anglia, have a third of the population of the UK and receive a third of public spending but pay 47 per cent of personal taxes. Bonsanquet says that where the government has the power to influence decisions by private firms it should do so in favour of the regions. “They shouldn’t even be thinking about putting a supercasino in London or the South East. It should be in Blackpool or somewhere else in the North of England”. For further information click here Sunday Times 30.07.06

City centres are more than just chain-store shopping; Anna Minton writes in the Guardian Society section on the impending final report on UK planning policy by Kate Barker s implications for the future of our towns and city centres. She says that Barker’s interim report lays great stress on productivity and enterprise and that the emphasis on economic growth will have an enormous impact on Britain’s urban environment. The Barker review contained a quote from a report by McKinsey arguing that there is “a greater proportion of UK employment in relatively [economically] inefficient corner shops and specialist shops”. It adds that shops of 3,000 sq metres are far more efficient than the average UK shop size of 500 sq meters, and implies that big stores, both in town centres and out-of-town will be encouraged. This will mean a further boost for big retailers operating in sterile, privatized enclaves while the spontaneous organic life of the city that encourages people to stroll and linger is squeezed out. She says that while the rhetoric in Britain proclaims a similar café-style urban renaissance in towns and cities, policy is fast going in the other direction under the guise of what is known as “retail-led development”, which roughly translates as “shopping means places”. More specifically it means shopping in American-style “malls without walls” policed by private security guards.  The Barker review seems to indicate that UK policy will be further strengthened towards retail-led development even though the public is in favour of the opposite. One only has to look at the success of Jan Gehl in Copenhagen whilst in the UK places like the Lanes in Brighton are both successful and popular. French planners have become so alarmed by the British experience that they have dubbed it “la Londonisation” and have introduced planning rules to prevent it. Half the shops in Paris have restrictions that prevent a change of use. For further information - click here Guardian 02.08.06

Key workers priced out in most of UK; research by the Halifax Bank shows that because of the rise in house prices over the past five years key workers such as nurses, teachers and policemen are now unable to afford a home in most parts of the UK. The average-priced house in 65 per cent of towns is beyond their reach, compared to only 24 per cent in 2001. In parts of the South East average house prices are now thirty times the salary of a public sector worker Gerrards Cross leads the ten least affordable locations with Kensington and Chelsea third and Westminster seventh. Average property prices in London cost nine times that of a nurse’s salary but the least affordable region is now the South West where house prices have risen considerably faster than salaries. Adam Sampson of Shelter said: “increasing the availability of housing across the board, including social rented housing, is the only way to relieve the pressure and reduce the numbers of families living in temporary
accommodation and overcrowded conditions”. For further information click here Times 29.07.06

Audit Commission extols virtues of Section 106; the Audit Commission says that improvements in the way that local government secures benefits from developments may make a proposed new development tax unnecessary. It finds that there are still huge variations in the amount that councils are extracting from developers - one of the charges made by the Government against the current system to justify its intention to tax the rise in land values generated by the granting of planning permission by using a planning gain supplement (PGS). However, the Audit Commission says that councils are improving and that many of the problems with the current system are being resolved. Councils currently secure contributions from developers to fund local infrastructure such as roads and schools through section 106 agreements with developers. Of the 11 councils surveyed in the report some were achieving £30,000 of contributions per home whilst others were only achieving £500. Of the 11 only four had a “comprehensive” approach to section 106. For further information click here Regeneration 04.08.06

Thames Gateway rumours; the Sunday papers carry a number of rumours about the  Thames Gateway. The Sunday Times says that Judith Armitt, Chief Executive of Medway council (pictured right), may be named shortly as Chief Executive of Thames Gateway by the Department of Communities and Local Government. Ministers decided to recruit a leader after criticism that the project lacked direction. The advert for the job said that the new Chief Executive would ensure that “Gateway is not just a dormitory for houses but a new economic powerhouse for London and the UK”. Thames Gateway is defined as the 40 miles stretching on both sides of the Thames estuary east of London’s docklands. It will inherit much of the infrastructure to be built for the Olympics and by 2016, it is envisaged that there will be 120,000 new homes and 180,000 new jobs.  The Observer reveals that the Government is set to give the go-ahead to a £1.5bn new port at Thurrock. To be called London Gateway the port will be built by Dubai Port World. There had been speculation that the government had cooled on the idea because of the need for a huge investment in infrastructure and land reclamation. The new port will create 16,500 jobs and should be operational by 2010. The decision is seen as making politicians more amenable to the Crossrail train project. Sunday Times 13.08.06, Observer 13.08.06

EMPLOYABILITY        

Three pilot schemes on use of ethnic quotas; the Times says that the Ethnic Minority Employment Task Force, which brings seven government departments together, has approved plans to question companies competing for government contracts on their attitudes towards race before choosing which one to select. Firms will be asked to supply details on the number of their black and Asian employees and this will be compared with local demographics. The Financial Times puts more flesh on the bones. Three pilot schemes have been authorised covering Job Centre Plus, the Identity and Passport Agency and the Department for Education and Skills. The details of the schemes have not yet been finalised but will still be awarded on the basis of value for money but companies with a workforce that reflects their labour catchment area might expect to have an advantage. It is unlikely that there will be a quota system. It will be the first time that “positive vetting” in procurement has been approved by a British government, although it is used in local government and, in particular, by the Greater London Authority. It follows the release of figures that show people from ethnic minorities are twice as likely to be unemployed as the white majority. Programmes of “affirmative action” have been used in the USA for a number of years although a Times leader attacks the idea as a “ham-fisted attempt to manipulate hiring practice through access to public expenditure that will take the merit out of meritocracy”. The Times accepts that ministers are right to think that government can play an active role but that is best achieved by concentrating on the essentials- education, training and the best possible employment information. (see Olympic Delivery Authority to offer bonuses) For further information click here and U.S. Department of Labor information click here  Times 07.08.06, Financial Times 08.08.06

Union wants controls on Indian IT workers; Indian IT workers have become the latest set of migrant workers to arouse concern. Amicus, the biggest private sector union, has urged ministers to tighten work permits to stem the tide of lower-paid foreign staff taking IT jobs “at the expense of UK professionals”. They claim that 30,000 work permits were issued for IT occupations last year, of which 18,000 were from India. This compares with a total of 1,800 work permits issued for all IT staff in 1995. Six of the ten companies sponsoring work permits between 2000 and 2004 had their headquarters in India and two-thirds were paid less than an equivalent of £30,000 a year compared to an average salary of £32,500 for a UK professional according to Amicus.  The FT says that employers said that it would be short-sighted to inhibit the hiring of foreign staff but shared the union’s concern that a lack of domestic recruits threatened the industry’s future. The influx of foreign staff highlights a growing shortage of qualified domestic recruits. According to the University and Colleges Admissions Service, the number of students applying for computer science courses has halved from 27,181 in 2001 to 13,650 last year. Other countries in eastern Europe and Asia have shown that they can produce sophisticated software developments at a lower cost than the UK and are producing hundreds of thousands of new graduates according to a report by the British Computer Society, Lancaster University and Microsoft. By 2010, some 102,000 IT and software jobs are expected to have moved offshore- equivalent to about 12 per cent of today’s workforce according to the BCS report. To compete Britain must raise its skills and seek to move up the value chain but the BCS warns that overseas suppliers will also be looking to do the same thing. For further information Amicus the Union click here and BCS information click here Financial Times 03.08.06 

Not enough research on UK emigration; Dhananjayan Sriskandarajah of the  Institute for Public Policy Research writes a column in the FT calling for more research to be done on UK citizens moving abroad. He says that emigration from the UK is rocketing but that few people seem to be considering the demographic or economic implications. Between 1966 and 1996 the UK actually lost more people through emigration than it gained through immigration. Now record numbers- about 200,000 in 2004- are leaving the UK on a permanent or long-term basis each year. The Foreign Office says that there are 4.5m British passport holders living overseas- more than the number of foreign nationals living in the UK. In global terms the UK diaspora is the second highest after Mexico. In future years the trend may become even more apparent with one fifth of all British retired people likely to move abroad. According to Spanish figures there are 274,000 registered British citizens, equivalent to the population of Leicester or Bradford- living in Spain. But when unregistered temporary migrants are taken into account it is thought that the total is 750,000. Sriskandarajah says that there are important economic consequences stemming from this migration not least where UK pensions are being spent. One irony that he points to is that the Spanish Mediterranean coast is littered with settlements that look more like Blackpool than Barcelona. Not only do these British not speak Spanish they have no qualms about complaining about leaving a Britain they perceive as being overrun by immigrants who refuse to integrate. Financial Times 07.08.06, Guardian 27.07.06

Worklessness declines in Sure Start areas; an evaluation of the Sure Start programme, published by the Department for Education and Skills, says that worklessness in areas covered by Sure Start is falling faster than the average for England as a whole. Sure Start was started in 200/01 and the report evaluates the progress until 2003/04. It says that there have been improvements in other areas such as the proportion of children aged four to 17 in families on income support. For further information click here Regeneration 04.08.06

TUC warns about plans to raise retirement age; the Trades Union Congress (TUC) has  issued a report saying that plans to curb public spending increases by raising the age of the state pension will not work if older people cannot find jobs and claim benefits instead. The report, ready, willing and able, claims that more than 1m people aged 50-65 want to work but cannot get jobs because many employers will not recruit or invest in training for older staff. The number of older people in work has risen by 1.5m since 1997, and the UK has a higher employment rate for older workers than most other EU countries. However this still leaves more than a third of the 2.6m unemployed or economically inactive people aged 50-65 wanting to work but unable to find a job- the second highest of the 15 EU countries. The number of people aged under 50 is forecast to decline by 2 per cent over the next decade while the number of people aged 50 to 69 is due to increase by 17 per cent. For further information click here Financial Times 14.08.06

EDUCATION

Truancy increasing twice as fast at academies; although academic results are improving more quickly than in other schools the latest report on City Academies shows that truancy, bad behaviour and bullying are worse than in other schools. The report by PricewaterhouseCoopers says that academies were also more likely to expel or suspend pupils with one academy expelling 27 children - one of the highest exclusion rates in the country. They also take a smaller proportion of economically disadvantaged students than the schools they replace, prompting fears that the improved results may be due to a changed social mix. In seven of the 11 academies, GCSE results improved although in the remaining four performances were “actually deteriorating”. Overall, academies boosted their results by an average of five points, against a national average of three pints. For further information click here Independent 28.07.06

LSC seeks to protect inner London adult colleges; the Central London Learning and Skills Council has appointed consultants to look at the future of the four dedicated adult education colleges in central London in the light of the changed funding priorities which could cut their budgets by 20 per cent. Philippa Langton, regional skills director of the central London LSC, said the whole mission and the reason why the colleges were set up is different from what the LSC and the government now deem as priority learning. She said that the LSC needed to think through a strategy for their future so that “these institutions, which have been around for a long time and which are much loved by learners, can carry on a very successful role for London”. The four colleges are City Lit, Morley College, the Mary Ward Centre and the Working Men’s College. The alternatives are seen as a federation of the colleges, where they share resources and save on administration costs; a full merger, creating a college with 50,000 students; or combining them with other FE colleges or universities. Times Educational Supplement 11.08.06

Physics could be in ‘terminal decline’; the number of pupils taking physics at A-level  has dropped by almost half since 1982 whilst a quarter of universities with large physics departments have given up teaching the subject since 1994 according to a report from the University of Buckingham. The situation could get worse as fewer physics graduates become available to teach the subject. Professor Alan Smithers said: “Physics is in the grip of a long-term downward spiral”. The report was sponsored by the Gatsby Foundation. For further information click here Guardian 11.08.06

Britain in danger of running out of scientists; four days before the latest A-level results are due to be announced the CBI has issued a warning that flaws in the secondary education system mean that Britain is running out of scientists. They claim thousands of potential physicists, biologists and chemists are being lost because of a “stripped-down” science curriculum, a lack of specialist teachers and uninspiring careers advice. In the long run, the British economy is under serious threat as its world-class science base is eroded while it faces strong competition from new, as well as traditional, international rivals. The CBI says that the problems begin in the secondary schools with the number of A-level pupils studying physics dropping by 56 per cent over the past ten years and the number of people studying A-level chemistry dropping by 37 per cent. Echoing a report by the University of Buckingham (see above) they claim that the number of physics graduates has decreased by a third yet demand for chemists, physicists, engineers and lab technicians is rising, and by 2014 the country will need 2.4 million workers with these skills. Some British companies are already recruiting abroad in places such as China, India, Brazil and parts of eastern Europe. For further information click here  Guardian 14.08.06

ENVIRONMENT

Households could get ‘carbon audit’; the Prime Minister has revealed that the government is looking at the idea of individual carbon audits as a means of stimulating carbon-reducing measures in individual households. He told BBC Radio 1’s Newsbeat that individuals could simply leave the job of tackling climate change to the authorities. Evening Standard 07.08.06

Defra has to cut £200m; cuts of nearly £20m have been ordered at the Department for Environment, Food and Rural Affairs (Defra) to make up for the extra costs incurred using anew system of paying subsidies to farmers. The cuts will be felt over the six months in dozens of organisations including the Environment Agency and British Waterways and are expected to hit existing flood defence projects, as well as scientific research and repairs to canals. Natural England, the flagship conservation body, that is due to take over from the Countryside Agency in October, will have a cut of £12m. Guardian 02.08.06

Currys to sell solar panels; Currys have become the first major retail chain to sell domestic solar panels, giving homeowners the chance to slash their energy bills. The company said that it would cost the average three-bedroom household about £9,000 to buy and install the panels. The current cost is about £16,000 although it would still take the average household between seven and 18 years to recoup the costs. The company will begin with three pilots at their stores in Fulham, Croydon and West Thurrock. For further information click here. Financial Times 31.07.06

LONDON

Mayor forecasts ‘spectacular rows’ with the Boroughs; Ken Livingstone (pictured right) has been basking in his new found powers over strategic projects and housing strategy and has told the Estates Gazette that he foresees “spectacular rows” with London councils as he pushes key strands of his London Plan- high-density, high-rise housing around transport hubs and 50 per cent affordable housing. However it is his increased power to deal with strategic projects that will be the major trigger-point although no definition of strategic has yet been issued by the Department of Communities and Local Government. In the GLA submission to the Government to seek the extra powers they cited three projects where the Mayor would have intervened. They were the Lots Road Power Station where two adjoining councils could not agree on the proposed housing towers; the Tate Tower, next to the Tate Modern, where Southwark demanded reductions in height and the number of units; and the Fairlop Racecourse in east London, which collapsed after amendments made in the planning process. Spokesmen for the leading London Boroughs have expressed concern about extra layers of bureaucracy and the undemocratic dimensions but leading property developers, such as Quintain and Blackfriars Investments, have given it enthusiastic support. Estates Gazette 29.07.06

London is the most expensive city to live; a survey of the world’s largest cities, undertaken every three years by UBS, shows that London is the most expensive place to live. Although it is relatively cheap for food and clothing, it is the most expensive for taxis, trains and restaurants. Accommodation is at least twice the cost of comparable cities, excluding New York. Despite this Londoners do not have compensating salaries with gross earnings coming sixth behind cities like New York, Zurich and Copenhagen. The UBS research, which covers wages, costs and purchasing power in 71 cities, shows that the most expensive cities including rent are London, New York, Oslo, Tokyo and Zurich. Excluding rent they are Oslo, London, Copenhagen, Zurich, Tokyo and Geneva. For further information click here. Financial Times 10.08.06

London boroughs lead unemployment table; according to the latest analysis of local labour markets by the Office for National Statistics three London boroughs lead the table for the highest unemployment. The highest rate is in Tower Hamlets (11.3 per cent), followed by Hackney (10.5 per cent) and Barking and Dagenham (9.2 per cent). The highest unemployment rate outside London was in Liverpool (9.2 per cent). For further information click here. Financial Times 29.07.06

London employers face skills shortage; the latest Bank of Scotland survey of the London labour market says that businesses are facing increasing difficulties in finding skilled workers. It shows that there was a strong growth in employment in the capital in July, but the availability of candidates fell at the sharpest rate for more than two years. For further information click here. Guardian 14.08.06

London to get skills centre for science; a new Science, Technology, Engineering and Mathematics centre is to open at the University of London’s Institute of Education in October. The centre will attempt to attract “first-rate” teachers and lecturers, and will run programmes to interest children in science. It will address skills shortages identified in a London Development Agency study of the science sector. The issue has come to the fore with the news that physics teaching is in sharp decline (see Education). For further information click here. Regeneration 11.08.06

Cameras will record illegal parking in the West End; About 20 CCTV cameras are to be used in the West End for the first time to catch motorists causing major congestion by parking on yellow lines or unloading vans illegally. The introduction of the cameras follows an eight-week trial run by the City of Westminster Council, which resulted in a marked improvement in traffic flow. The main focus of the campaign will be on double yellow lines and loading bays in areas such as Piccadilly, Soho, the Strand and Oxford Circus. For further information click here. Times 08.08.06

New free newspaper for London; News International, Rupert Murdoch’s UK newspaper arm, is to start publication of a free evening paper next month. To be called thelondonpaper, it will be aimed at a young, upmarket audience and contain a mixture of serious and light news as well as details of what’s on in London. It will become the fourth freesheet in the capital joining Associated Newspaper’s Metro and Evening Standard Lite as well as the independently owned City AM. The paper will have a 400,000 print run and will be distributed between 16.30 and 19.30 using 700 distributors. Ian Clark, General Manager of News International’s free newspaper division, said that whilst commuters under 35 were reading newspapers on their way to work in the morning, after work they did not want serious news. Free newspapers were pioneered by Swedish group Metro International, with many leading European cities such as Madrid and Paris, having several free titles. Transport for London have delayed news of contracts to distribute newspapers in London’s Tube and mainline railway stations. The Observer speculates that the Evening Standard may be poised to counter the new paper by raising the cover price to 50p both to give it more revenue for promotion and to make the paper more upmarket. It also speculates that the Evening Standard Lite, which is given away at lunchtimes, may be given a new name and extra content. Financial Times 02.08.06, Observer 13.08.06

LONDON OLYMPICS 2012

Olympic bidders must show progress on ethnic employment; whilst the Government labours over new rules governing procurement to encourage the employment of ethnic minorities, the Olympic Delivery Authority is going further. Following a meeting with Trevor Phillips, the head of the Commission for Racial Equality (pictured right), the ODA, who will be spending £3.4bn, will give bonuses to contractors who increase their total of black and Asian employees. The move follows concern amongst ministers and race bodies that the firms working on the Olympics, which will be held in one of the most ethnically diverse areas in the UK, should reflect the ethnic make-up of London. Times 08.08.06

Imaginative funding needed to enable Olympics to break pattern; fresh from a tour around the Olympic sites Will Hutton uses his column in the Observer to call for the Treasury not to block the opportunities presented by the 2012 Games. He says that the Lea Valley, especially the parts around Stratford, East and West Ham and Hackney, is a disgrace and makes the dereliction in parts of the north of England and Scotland look tame. Yet it is only two miles from the City, one of the richest urban areas in the world. The Olympics can change all that and the plans have a post-games vision for how the Olympic Park and associated infrastructure will become the trigger for the biggest urban regeneration scheme mounted in Europe. The problem is whether our national, political, business and official classes will have the chutzpah to follow through. The British have the reputation of not being good at grand projets and this is the chance to break out of that negativity and find ways of embracing the new and, especially, of financing it. East London will be left with a new park to join St James’s and Hyde Park; the infrastructure of a new university campus; a network of world-class sporting facilities; first-class transport links and land cleared for 40,000 houses. The chancellor could copy the American model and tax some of the wider, incremental, gain. The Olympics should be funded as imaginatively as the project has been devised and the precedent then used across the country. Observer 30.07.06

Three on homes shortlist; three consortia have been shortlisted to build 4,500 homes and other buildings at Stratford City, a £4bn project adjacent to the Olympic Stadium which will be used as the Olympic Village. Following the fall-out between the original partners Westfield, the Australian retail giant, will continue to build the shopping centre but is seeking a new partner for the homes, hotel and other facilities. The three candidates are Bouygues with Barratt Homes; Land Lease leading a consortium including East Thames Group, First Base and Crosby Homes; and Royal Bank of Scotland leading a consortium with Bellway Homes, Gladedale and Kier. The Estates Gazette comments on the number of leading developers such as Land Securities, Grosvenor, Quintain, Hammerson and Development Securities who decided that the delivery of so much residential and offices into Stratford’s market represented too great a risk. Financial Times 11.08.06, Estates Gazette 12.08.06

LONDON DEVELOPMENT

Peabody back in development; the Peabody Trust has announced plans to redevelop its 10-acre Ladbroke Green site, near Ladbroke Grove W10, to provide 308 homes and 173,000 sq ft of offices. In its latest business plan the Trust reveals that it made a post-tax surplus of £27.6m, against £18.4m in the previous year. Two years ago Peabody scaled back on its development plans and cut jobs after its housing projects ran over budget. For further information - click here. Estates Gazette 29.07.06

Paddington station will keep fourth span; Network Rail has withdrawn its plan to demolish the fourth span of Paddington station- an Edwardian addition carefully matched to Brunel’s original terminus for the Great Western Railway. The proposed demolition, to make way for an office and retail development, had planning permission from Westminster Council, but was being fought passionately by architectural historians. It would have been the most extensive destruction of a Grade 1 structure since listing began. Guardian 02.08.06

Covent Garden sold; Capital & Counties, a subsidiary of Liberty International, has bought Covent Garden market for £421m from Scottish Widows and Henderson Global Investors. John Saggers, Capital & Counties’ managing director, said that Covent Garden, which attracts 1 million visitors a week, was a long-term investment. The seven-acre site includes the old market and surrounding piazza with 31 properties. Mr Saggers said that he would be consulting the Covent Garden Area Trust. “Tourists are fine but it would be nice if a few London workers were attracted to it as well”. Guardian 08.08.06

Battersea Power Station runs into more trouble; the planned refurbishment of the 38-acre Battersea Power Station by the Hong Kong-based Parkview Group has run into further turbulence. Following the disputes in senior management about the detail of the scheme and the nature of outside investment the Health and Safety Executive have now warned that they are concerned about the development’s proximity to a gasometer and that if Wandsworth Council approves the new plans they may still request that the scheme is called in by the secretary of state. Wandsworth expressed surprise at this turn of events as the HSE has previously endorsed the plans in 2004. It is believed that Parkview are seeking an agreement with Wandsworth to build the houses first before the Power Station buildings are completed. One piece of good news is that work has begun on refurbishing Battersea Park railway station, which is part of the planning gain for the overall development. Estates Gazette 12.08.06

Savile Row- signs of peace breaking out; following a campaign led by Westminster City Council to ensure its continued survival is starting to bear fruit. Henry Poole Co, who have been in Savile Row for 180 years, have agreed a new 15-year lease with the Pollen Estate, a major landlord, and at least one of the other ten bespoke tailors is in negotiations on a new lease in the street. Many of the tailors had been faced with rent rises of 57 per cent as their leases came to end whilst the Pollen Estate was anxious to bring in designer brands and new offices which could afford the higher rents. Under the new lease Henry Poole will move their workshops out of the upper floors and into the basement allowing the upper floors to become offices. The Pollen Estate has also committed £50,000 to support the training of new tailors and for the improvement of the public spaces on the street. Times 12.08.06

 

Next issue on September 7th, 2006

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